Papago Park, Phoenix, Arizona

Papago Park, Phoenix, Arizona, originally uploaded by atridim.

A WIDESCREEN HD Photo of Excellence from my Flickr Photostream

The 1.6% GDP estimate sounds alarm that unemployment rates will be rising

The recent GDP estimate of 1.6% growth is anemic. It sounds an alarm that the unemployment rate will be on the rise. I predict a “Double Dip Recession” and this will be a “Lost Decade”. 

  

The broadest gage of our economy is the GDP (Gross Domestic Product) Growth Rate.

It is calculated every quarter by Uncle Sam. It captures the total value of all US goods and services.

  

GDP ZONES:

  

REAL GROWTH: A GDP growth rate above 3% reduces unemployment (light shaded upper band on chart in the link below).

A GDP growth rate of 5% for 4 quarters is needed to reduce the US Unemployment Rate by 1%.

  

ANEMIC GROWTH: A GDP growth rate of 0%-3% increases unemployment (darker shaded middle band on chart in link below).

In this area, our economy can not provide enough new jobs to keep up with new graduates entering the workforce. 

  

RECESSION: A GDP growth rate below 0% for 2 or more quarters (lighter shaded lower band on the chart in link below).

  

DEPRESSION: A GDP growth rate below -10% for 4 or more quarters.

  

Captain Rick’s Past Economic Projection Score Card of correct calls:

2006 US Real Estate Market Crash

2008 US Bank Meltdown

2008 US Stock Market Crash

2008 US Recession

2010 European Financial Crisis

Pending…..US & Europe: Double Dip Recession 2011-2013

Pending…..US & Europe: Lost Decade 2006-2016

Pending…..China: Real Estate collapse 2011-2013

Pending…..Canada: Real Estate collapse 2011-2015

 

Captain Rick’s Economic Projection:

The recent significant reduction in the estimate for the US GDP rate (1.6%) for the second quarter of 2010 is alarming.

It adds fuel to the projection of a “Double Dip Recession” by many economists.

What I find to be of much greater concern is the dominance of all but 3 of the past 18 quarters lying in the “Anemic Growth” or “Recession” range. That signals a very strong possibility that we are in a period that some economists refer to as a “Lost Decade”, one that has little or no real growth.

Scanning the economic horizons, I see no economic engines in the US that will move the GDP growth predominantly above that 3% line any time soon.

I predict that we will see a “Double Dip Recession” and this will be a “Lost Decade”.  

 

Captain Rick’

. . . My economic perspective presented thru the eye of an engineer and a lifelong student of economics.

 

GDP Chart Data: http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=USD

Mexican President Calderon addresses his nation: admits violence worse

Mexican President Felipe Calderon admitted drug violence was worsening in Mexico but said the cartels had been weakened by the toppling of several major drug bosses, in his annual address Thursday.

“It’s an ever more bloody war between organized crime groups fighting for territory, markets and routes,” a defiant Calderon told hundreds of top officials and politicians at Mexico City’s National Palace.

The Mexican leader is under increasing fire for his military crackdown on organized crime launched in 2006, which has been accompanied by an eruption of violence including the recent massacre of 72 migrants by a suspected drug gang in northeastern Mexico.

The annual state of the nation report said authorities had made 34,515 drug-related arrests in the past year and confiscated more than 34,000 weapons, more than 72 million dollars and 133 million pesos (10.2 million dollars) in cash.

They seized the equivalent of 2.5 billion dollars in drugs, said the report published late Wednesday.

Drug violence — including beheadings, hangings and shootings — has meanwhile expanded to more of the country, including several car bombs for the first time this year. More than 28,000 people have died in drug-related attacks since 2006, according to official figures.

Calderon highlighted efforts to root out corruption and modernize police, after the firings this year of some 3,200 federal officers for poor performance.

Story: http://www.google.com/hostednews/afp/article/ALeqM5j4pAcCfPDFdIwlYrc6ABMh5Ctvrg